Sale of Tempe condos falls through

The $30 million sale of the vacant Centerpoint Condominiums in Tempe has fallen through, officials involved in the deal have confirmed.

The property likely will be off the market until a number of legal issues are resolved, they said, which could take months.

Zaremba Group, the Cleveland-based real-estate firm that announced in September it was buying the complex to convert it into apartments, decided to back out of the deal because a number of complications threatened to drag out the sale process.

A key component of Zaremba's marketing plan had been to have the project ready in time to market the apartment units to incoming college students in the fall.

The unresolved issues include several liens placed against the property by various contractors who were not paid for their services.

The project's original developer, Tempe Land Co., and its lender, Mortgages Ltd., both declared bankruptcy in 2008.

Representatives of Zaremba could not be reached for comment, but the company had explained its plans to The Republic for a previous story about the sale.

Other companies involved in the purchase confirmed that the deal was off.

The towers, which stand 22 and 30 stories high, are among the most prominent condo developments in downtown Tempe, many of which are struggling to attract new buyers.

Finding a buyer for the formerly named Centerpoint Condominiums had become a priority for local leaders and business owners, who believed its opening could help kick-start the downtown area's ailing economy.

The deal was being brokered by ML Manager LLC, a company formed by investors to dispose of or generate revenue from assets formerly owned by now-defunct Mortgages Ltd.

ML Manager CEO Mark Winkleman said the sale fell through late last month, after Fidelity National Title Insurance Co., the title insurer participating in the deal, decided not to issue title insurance to Zaremba.

Fidelity's decision came after it had agreed to defend against the lien claims in court, Winkleman said.

Officials from the title-insurance company declined to comment pending any litigation.

The setback threatened to delay the projected August 2011 opening of the towers, which Zaremba had planned to develop into high-end student housing.

If the property had opened after the school year began - when most students already had living arrangements - it would have been a major blow to the project, those familiar with the Tempe market said.

Winkleman said negotiations to remove the remaining mechanics' liens likely would drag on for months and would delay the process of finding a new buyer - or perhaps an effort to coax Zaremba back to the discussion table. ML Manager won't move forward until the issue is settled in court, Winkleman added.

Zaremba announced in September that it would buy the two unfinished residential towers for $30 million, a fraction of their originally estimated $135 million development cost, most of which Mortgages Ltd. had loaned to Tempe Land Co.

The project had been in foreclosure since January, and ML Manager had spent more than nine months trying to find a buyer.